-UCHûOFû3ANTANDERSû53ûBUSINESSûISûDONEû
through its sub-prime auto lending unit
Santander Consumer USA, which is a
frequent issuer in the structured market.
4HEûCOMPANYûRAISEDû53BNûINû-AYû
through a sub-prime ABS deal that priced
with a blended coupon of 2.9%, compared
WITHûûONûAûDEALûSOLDûINû*UNEûLASTûYEAR
-OODYSûNOTEDûINûITSûPRE
SALEûREPORTûFORû
the deal that recent Santander ABS had been
performing better than expected, leading
the agency to lower its loss assumptions
slightly for the loans in the latest deal.
The auto lender has yet to resolve a two-
year-old enforcement action from the
&EDERALû2ESERVE ûWHICHûSEEKSûSTRICTERû
oversight of its sub-prime lending
operations.
h3UB
PRIMEûCONSUMERûlNANCE ûWHETHERûITû
be auto or unsecured, are very generous
markets in early to mid-cycle, and then they
ABRUPTLYûBECOMEûUNPROlTABLEûWHENûTHEû
MARKETûTURNS vûONEûINVESTORûTOLDû)&2
“Right now, we’re still in a benign credit
ENVIRONMENTûxûBUTûTHEREûISûAûLONGûHISTORYûOFû
foreign banks thinking that they can do sub-
prime risk better than the locals or that they
won’t be the ones holding the bag when the
cycle turns.”
OFF THEN ON AGAIN
Santander Consumer USA has long been the
preferred auto lender for FIAT CHRYSLER, but
last year the automaker initiated plans to
sever its ties and form its own internal
CAPTIVEûlNANCEûUNIT
(OWEVER ûFORMERû&IATû#HRYSLERû#%/û3ERGIOû
-ARCHIONNEûDIEDûSHORTLYûFOLLOWINGûTHEû
announcement, putting the formation of a
new captive lender on the back burner for
the time being.
So the relationship has continued and has
even strengthened as Santander loans
ORIGINATEDûTHROUGHûTHEû&IATû#HRYSLERû
relationship are up 23% year over year
THROUGHûTHEûlRSTûQUARTERûTOû53BN û
according to earnings release.
9ET ûFEARSûTHATûTHISûRELATIONSHIPûCOULDûBEû
in jeopardy resurfaced the week before last,
WHENû&IATû#HRYSLERûANNOUNCEDûPLANSûTOûBUYû
&RENCHûAUTOMAKERû2ENAULTûFORû53BN û
although this deal subsequently collapsed.
Additionally, Santander Bank ran into
regulatory problems earlier this year, when
it was discovered that the bank was errant
in the way it calculated and disclosed
interest on credit cards, causing overcharges
for some customers.
Santander suspended all new card
ISSUANCEûSTARTINGûINû-ARCHûUNTILûTHEûPROBLEMû
can be resolved.
In another negative for credit holders,
Santander Consumer USA also announced a
53MûSECOND
QUARTERûSHAREûREPURCHASEû
programme after completing its inaugural
US$200m programme in January.
30ûANDû&ITCHûMAINTAINû""" ûRATINGSûFORû
3ANTANDERû(OLDINGSû53!ûBUTû-OODYSûPLACESû
it at the lowest rung of Triple B, noting that
it would warrant a high-yield rating if it
were not for its global backer.
“The long-term debt ratings of Santander
Holdings USA and the ratings of its
SUBSIDIARIESûBENElTûFROMûAûONE
NOTCHûRATINGû
UPLIFTûFROMû-OODYSûASSESSMENTûOFûHIGHû
probability that the bank’s ultimate parent,Banco Santander SA, would provide
SUPPORT vû-OODYSûWROTEûINûTHEûREPORTEUROS
INVESTORS ACCEPT BNZ’S SHARP
PRICING, POST ECB-DELUGE FORESEENStrong investor appetite for more defensive
senior paper accommodated an aggressive
pricing move for BNZ INTERNATIONAL FUNDING
LTD’s 5.25-year senior unsecured note
issue.
".:SûTRADEûLASTû&RIDAYûPRECEDEDûAûPIPELINEû
of issuers ready to launch senior deals this
week, which will be encouraged by a decent
spread performance in the secondary
MARKETûSINCEûLASTû-ONDAY
Higher quality senior paper is particularly
in demand, bankers say, given that investors
are still wary of broader volatility, which has
STEMMEDûTHEûmOWûOFûSUPPLYûINûTHEûLASTûTWOû
weeks.
Leads Barclays, JP Morgan, NAB and UBS
MARKETEDûTHEû3EPTEMBERûûISSUEûWITHû
initial price thoughts of 75bp over mid-
swaps area.
'UIDANCEûWASûREVISEDûTOûBPû nBP û
BEFOREûTHEûSPREADûWASûlXEDûATûBPûANDûTHEû
SIZEûATûõMûONûTHEûBACKûOFûMOREûTHANû
õBNûOFûORDERSûPRE
RECONCILIATION
The 17bp jump is roughly in line with
recent senior trades, but bankers said it felt
like more of a stretch given most of those
trades were backed by bigger books.
“It’s a very aggressive move,” said a
syndicate banker away from the deal. “If
they get away with it, then good luck to
them.”
A syndicate banker at one of the leads said
THEûMOVEûWASûJUSTIlEDûBYûTHEûSIZEûOFûTHEû
BOOKûnûWHICHûALSOûLEDûTHEûISSUERûTOûUPSIZEû
the deal from its €500m base case.
“€750m at 58bp does look aggressive
VERSUSûWHEREûWEûSTARTEDûxûBUTûITûENDEDûUPû
being the right thing to do,” he said. “There
really wasn’t price sensitivity in the book to
the extent we expected, and we had a few
investors come in quite late.”
4HEûlNALûBOOKûSTOODûATûõBN
This is substantially smaller than most
recent trades from better followed
jurisdictions. But bankers said the deal’s
momentum was impressive, given trades
from New Zealand often garner books of
below €1bn.
The lead syndicate banker said demand
was elevated because the deal offered an
attractive spread for its ratings – expected to
BEû!!!nû-OODYS30 ûnûBUTûWASûSTILLû
relatively defensive in tenor and in terms of
being a lower beta name.
“Investors are sitting on cash – it’s been
quiet in primary – but are maybe a littleALL GLOBAL AND EUROMARKET YEN BONDS
BOOKRUNNERS: 1/1/2019 TO DATE
Managing No of Total Share
bank or group issues ¥(m) (%)
1 Mizuho 7 154,091.71 21.9
2 Sumitomo Mitsui Finl 6 140,066.71 19.9
3 Nomura 6 99,941.67 14.2
4 Mitsubishi UFJ MS 3 87,633.38 12.5
5 Daiwa Securities 4 67,925.00 9.7
6 BNP Paribas 2 40,050.00 5.7
7 MUFG 2 35,975.00 5.1
8 SG 1 32,066.67 4.6
9 BAML 1 21,575.00 3.1
10 Credit Agricole 1 15,175.00 2.2
Total 15 703,728.13
Excluding equity-related debt. Including preferreds.
Source: Refinitiv SDC code: K10
ALL SAMURAI BONDS
BOOKRUNNERS: 1/1/2019 TO DATE
Managing No of Total Share
bank or group issues ¥(m) (%)
1 Daiwa Securities 20 251,176.67 24.7
2 Mizuho 20 247,743.33 24.3
3 Sumitomo Mitsui Finl 19 196,176.67 19.3
4 Nomura 9 104,216.67 10.2
5 HSBC 4 77,626.67 7.6
6 Mitsubishi UFJ MS 4 65,100.00 6.4
7 Natixis 5 40,900.00 4.0
8 BNP Paribas 4 18,460.00 1.8
9 Citigroup 1 17,500.00 1.7
Total 22 1,018,900.00
Excluding equity-related debt.
Source: Refinitiv SDC code: K11
ALL INTERNATIONAL YEN BONDS
BOOKRUNNERS: 1/1/2019 TO DATE
Managing No of Total Share
bank or group issues ¥(m) (%)
1 Mizuho 27 401,835.04 23.3
2 Sumitomo Mitsui Finl 25 336,243.38 19.5
3 Daiwa Securities 24 319,101.67 18.5
4 Nomura 15 204,158.33 11.9
5 Mitsubishi UFJ MS 7 152,733.38 8.9
6 HSBC 4 77,626.67 4.5
7 BNP Paribas 6 58,510.00 3.4
8 Natixis 5 40,900.00 2.4
9 MUFG 2 35,975.00 2.1
10 SG 1 32,066.67 1.9
Total 37 1,722,628.13
Including all Euro, foreign and global issues. Excluding equity-related
debt.
Source: Refinitiv SDC code: K12